EMI & Calculators · 4 min read
Fixed vs Floating Home Loan Interest Rate
Most home loans in India are taken on a floating rate, but some lenders also offer fixed or partly fixed options. The right choice depends on how much certainty you want and where you think rates are heading.
How floating rates work
Floating-rate home loans to individuals are linked to an external benchmark — most commonly the RBI repo rate — plus a spread set by the lender. When the benchmark changes, your rate changes at the next reset, and the lender usually adjusts the tenure or EMI.
How fixed rates work
A fixed rate stays the same for a set period, sometimes the full tenure but more often a few years before converting to floating. Fixed rates are usually priced higher than floating at the start.
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Check My RatePrepayment rules differ
RBI rules do not allow prepayment or foreclosure penalties on floating-rate home loans taken by individuals. Fixed-rate loans may carry prepayment charges, so check the sanction letter if you plan to prepay.
Which to choose
Floating suits most long-tenure borrowers who plan to prepay and want to benefit if rates fall. Fixed can suit borrowers who value a predictable EMI over a few years. Either way, the spread over the benchmark is what you should compare between lenders.
Example: effect of a 0.5% rate difference
| Loan amount | ₹30,00,000 |
|---|---|
| Tenure | 20 years |
| EMI at 8.50% | ₹26,035 |
| EMI at 9.00% | ₹26,992 |
| Difference over 20 years | about ₹2,30,000 |
Illustrative only. Try your own numbers in the EMI calculator on the home page.
Common mistakes
- Choosing a fixed rate without reading when it resets
- Never checking whether your floating rate has come down with benchmark cuts
Frequently asked questions
Is a fixed or floating home loan better?
Most home loans in India are floating. Fixed rates give EMI certainty but are often higher and may carry prepayment charges.
Interest rates, fees, eligibility and loan terms vary by lender and borrower profile. Information on this page is for educational purposes and should not be considered a guarantee of approval or a specific rate. RateWise is a loan advisory, not a lender. Privacy Policy